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JD Sports boss Peter Cowgill ‘questions’ national insurance and corporation tax rises

·3-min read
JD sports  (PA Archive)
JD sports (PA Archive)

JD Sports boss Peter Cowgill has joined the chorus of politicians and business leaders urging chancellor Rishi Sunak to rethink looming tax rises.

Cowgill told the Standard: “The imposition on businesses this year, at a time when you’ve got such wage inflation in any event, is pretty strong. You’ve got the imposition of national insurance and you’ve got the increase in corporation tax as well. That impacts on retained profits for investment.

“I would certainly question it, very much so”

National insurance, a tax paid on salaries employees, is set to rise by 1.25 percentage points from April. Corporation tax is set to rise from 19% to 25% at the same time.

The tax increases were announced last year as part of efforts to claw back some of the billions spent supporting the country through the pandemic, but a growing coalition of business leaders, politicians, economists and experts have said it may not be the right time. There are fears that the changes could derail the UK’s economic recovery.

Cowgill said JD was already noticing “definite wage inflation” due to labour shortages and the rising living wage. Tax increases would put more pressure on businesses like his.

Cowgill’s comments came as JD Sports upgraded its profits forecasts for the year after a strong Christmas.

The footwear and sports clothes retailer said annual profits are now expected to be at least £875 million, ahead of current market expectations averaging £810 million.

Sales in the 22 weeks to 1 January were up 10% on 2020, which JD said was “extremely robust.” The company enjoyed an “equally positive performance across the Black Friday and Christmas period.”

Cowgill said: “We’re very pleased with Christmas holding up the same way as the entire year.”

Strong sales in the 22-week period were partly down to an estimated £100 million boost from US stimulus last year. Millions of stimulus checks were sent to Americans encouraging them to boost their spending.

Moving forward, JD faces “challenges” such as inventory shortages from some brands, Covid restrictions around the world and wage inflation, but the company said it was “well placed to manage.” Profits in the year to January 2023 are now expected to be in line with the current year, which would put it ahead of market forecasts.

Cowgill said: “In all supply chains there are difficulties because of the sourcing from the Far East, the lockdowns, and the catch-ups. The global brands are no different from others in that regard.

“It won’t be fully better till the back half of the year.”

JD Sports last year lost out on its long-running attempt to buy Footasylum after being blocked by the regulator. Cowgill declined to comment on reports that rival Mike Ashley, the founder of Sports Direct, is now circling the chain.

Amisha Chohan, head of small cap strategy at Quilter Cheviot, said: “JD Sports is in prime position to capitalise on the demand for athleisure, and posted a positive trading statement this morning. Management’s guidance for the financial year 2023 has been raised but still remains conservative, in our opinion.

“Many retailers still suffer from the same fragile financial structures they had pre-pandemic and will come under intense pressure. JD Sports, however, is a high-quality business and well-positioned to consolidate the market and with a strong management track record and ‘trusted partner’ relationships with the premium brands such as Nike and Adidas. The path to further growth remains clear for JD Sports.

“Furthermore, in an environment of increasing inflationary pressures, JD Sports benefits from strong pricing power and a younger consumer base.”

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